Florida Investment Network


Recent Blogs


Pitching Help Desk


Testimonials

"Joined, submitted, we're moving forward. Excellent site, thanks again... "
Steve Smith - EquipmentFX


 BLOG >> Recent

Seed Money and Series A Financing [Finance
Posted on January 4, 2013 @ 09:45:00 AM by Paul Meagher

A couple of terms you might come across when searching for startup business capital are "Seed Money" and "Series A financing". Most entrepreneurs using this site to fund their startup will be looking for seed money. Generally after you have exhausted your credit line and tapped out any friends or family that might be willing to help out, you will seek out an angel investor or business investor for additional startup capital. The money these investors supply is called "Seed Money". Seed money is subject to a higher risk because often the business model is not proven or is not generating much revenue yet. The investor will generally be looking for ownership in the company in return for capital.

In the textbook account of startup funding, the next round of funding after the Seed Money round would be called Series A financing round. This round of funding involves larger amounts of money and generally involves venture capital organizations putting up the money. In this round of funding, the legal complexity of the contracts generally goes up and the level of scrutiny and involvement by the venture capital company also goes up. In this round of funding, the percentage of ownership you might have to sacrifice might be about the same as you sacrificed during the Seed Money round, but you will be asking for more money in the Series A financing round owing to the fact that there is less risk involved now and the business model might be starting to generate revenues.

If further rounds of funding are required, then those rounds will be called Series B, C, D, etc.... The letter lets the investor know where they fit in the hierarchy of company investors. If you intend to engage in multiple rounds of financing, then the worry for an investor is that their share of the company profits will be too small to make it worth their while investing in the company. Forward looking entrepreneurs will anticipate this dilution issue and will refrain from giving away too much of the company in the earlier rounds so that there is some left for later rounds of investment.


Image Source: http://en.wikipedia.org/wiki/File:Startup_financing_cycle.svg

We are talking here about rounds of investment that might required to turn a small company with a good idea into a large company with a profitable business model. These are not the only companies small business investors are interested in. Small business investors are also very interested in funding existing businesses that require capital to expand their business.

Permalink 

 Archive 
 

Archive


 November 2019 [2]
 October 2019 [2]
 September 2019 [1]
 July 2019 [1]
 June 2019 [2]
 May 2019 [2]
 April 2019 [5]
 March 2019 [4]
 February 2019 [3]
 January 2019 [3]
 December 2018 [4]
 November 2018 [2]
 September 2018 [2]
 August 2018 [1]
 July 2018 [1]
 June 2018 [1]
 May 2018 [5]
 April 2018 [4]
 March 2018 [2]
 February 2018 [4]
 January 2018 [4]
 December 2017 [2]
 November 2017 [6]
 October 2017 [6]
 September 2017 [6]
 August 2017 [2]
 July 2017 [2]
 June 2017 [5]
 May 2017 [7]
 April 2017 [6]
 March 2017 [8]
 February 2017 [7]
 January 2017 [9]
 December 2016 [7]
 November 2016 [7]
 October 2016 [5]
 September 2016 [5]
 August 2016 [4]
 July 2016 [6]
 June 2016 [5]
 May 2016 [10]
 April 2016 [12]
 March 2016 [10]
 February 2016 [11]
 January 2016 [12]
 December 2015 [6]
 November 2015 [8]
 October 2015 [12]
 September 2015 [10]
 August 2015 [14]
 July 2015 [9]
 June 2015 [9]
 May 2015 [10]
 April 2015 [10]
 March 2015 [9]
 February 2015 [8]
 January 2015 [5]
 December 2014 [11]
 November 2014 [10]
 October 2014 [10]
 September 2014 [8]
 August 2014 [7]
 July 2014 [6]
 June 2014 [7]
 May 2014 [6]
 April 2014 [3]
 March 2014 [8]
 February 2014 [6]
 January 2014 [5]
 December 2013 [5]
 November 2013 [3]
 October 2013 [4]
 September 2013 [11]
 August 2013 [4]
 July 2013 [8]
 June 2013 [10]
 May 2013 [14]
 April 2013 [12]
 March 2013 [11]
 February 2013 [19]
 January 2013 [20]
 December 2012 [5]
 November 2012 [1]
 October 2012 [3]
 September 2012 [1]
 August 2012 [1]
 July 2012 [1]
 June 2012 [2]


Categories


 Agriculture [71]
 Bayesian Inference [14]
 Books [15]
 Business Models [24]
 Causal Inference [2]
 Creativity [7]
 Decision Making [15]
 Decision Trees [8]
 Design [37]
 Eco-Green [4]
 Economics [12]
 Education [10]
 Energy [0]
 Entrepreneurship [61]
 Events [2]
 Farming [20]
 Finance [25]
 Future [15]
 Growth [18]
 Investing [24]
 Lean Startup [10]
 Leisure [5]
 Lens Model [9]
 Making [1]
 Management [9]
 Motivation [3]
 Nature [22]
 Patents & Trademarks [1]
 Permaculture [34]
 Psychology [1]
 Real Estate [2]
 Robots [1]
 Selling [11]
 Site News [15]
 Startups [12]
 Statistics [3]
 Systems Thinking [3]
 Trends [7]
 Useful Links [3]
 Valuation [1]
 Venture Capital [5]
 Video [2]
 Writing [2]